Posts Tagged ‘Base rate’
Low base rate could cost savers £43bn
Campaign group Save our Savers today revealed the cost to savers of the Bank of England’s decision to hold the base rate at 0.5% for the 33rd successive month.
The group estimates that the low interest rate combined with a retail price index at 5.6 per cent, its highest level for 20 years, and a consumer prices index rate of 5.2% will cost savers £43 billion over the next year.
Save our Savers believes that the Bank of England’s strategy has caused the value of sterling to fall by 25 per cent since 2007.
According to Moneyfacts.co.uk the average new instant access account offers 0.93% interest, compared with 4.21 per cent in November 2007.
These low interest rates, together with a high level of inflation mean that it is impossible for savers to protect the value of their savings.
Save our Savers has accused the Bank of England of “failing in its statutory duty” and it wants the government to intervene.
It believes that the Monetary Policy Committee may have acted illegally in letting inflation exceed its stated target of 2 per cent.
According to analysts, an increase in the base rate is unlikely until mid-2013 in the face of the weak UK economy and the ongoing crisis in the eurozone.
In addition to maintaining a low base rate, the Bank of England pumped another £75 billion into the economy last month through its quantitative easing programme.
New figures from the ONS revealing that producer price inflation fell to 5.7% on October, compared with 6.3% in September.
The reduction in producer price inflation, which reflects the price of goods at the factory gate, together with poor September trade figures, is likely to be seen by the Bank of England as an indication that the quantitative easing programme should continue despite high consumer price inflation.
Base rate held at 0.5%
The Bank of England’s Monetary Policy Committee has voted to maintain the base rate at 0.5% in May, as widely expected. The Bank’s quantitative easing (asset purchase) programme will also be maintained at its current level of £200 billion. The base rate has remained unchanged since March 2009, despite inflation running at 4%, double the [...]
Interest rates to remain low
Low interest rates look set to continue, with the Governor of the Bank of England having warned that “massive” economic challenges faced by high levels of debt would only be worsened by rate hikes. Addressing the European Parliament’s Systemic Risk Board yesterday, Mr King said: “The economic consequences of high-level indebtedness now would become more [...]
Remortgaging relief as interest rates “pinned to the floor” until 2014
Mortgage borrowers will be pleased to hear that interest rates could be “pinned to the floor” until 2014.
The prediction comes in the latest report by respected economic forecaster, Ernst & Young Item Club, which at the same time acknowledges that high energy prices and the VAT rise due in January will keep inflation above the [...]
Economy improving, Santander claims
Britain’s economy is on the road to recovery, Santander has claimed.
Barry Naisbitt, chief economist at Santander UK, pointed out that economic growth during the fourth quarter of 2009 has been revised from 0.1% to 0.4%.
He added that the economy has continued growing during 2010.
“Some recent indicators, particularly survey indicators of output, are showing a more [...]